Question

Suppose that two current exchange rates are US $1 = 7.7631 Hong Kong dollars and 1 euro = $1.169. What is the value of 1 Hong Kong dollar in euros?

a) 0.151 euros
b) 6.641 euros
c) 0.110 euros
d) 9.075 euros

Answer 1

The value of 1 Hong Kong dollar in euros is found by taking the reciprocal of the Hong Kong to US dollar rate and then converting the resulting US dollar value to euros using the euro to US dollar rate. The correct value is approximately 0.110 euros.

Step-by-step explanation:

To determine the value of 1 Hong Kong dollar in euros, we need to use both given exchange rates: US $1 = 7.7631 Hong Kong dollars and 1 euro = $1.169. First, we find the value of the Hong Kong dollar against the US dollar by taking the reciprocal of the Hong Kong to US dollar rate, which is 1/7.7631. Then we convert the US dollar value to euros using the euro to US dollar rate, which is 1/1.169 euros per dollar.

To calculate:

1. Value of 1 Hong Kong dollar in US dollars = 1 / 7.7631
2. Value of 1 US dollar in euros = 1 / 1.169
3. Therefore, value of 1 Hong Kong dollar in euros = (1 / 7.7631) × (1 / 1.169) euros.

When we do the math, we get:

1 Hong Kong dollar = 0.1287 US dollars (approximately)

1 US dollar = 0.8554 euros (approximately)

Hence, 1 Hong Kong dollar is equal to 0.110 euros (approximately), which is option c) 0.110 euros.